>> kevin? >> i think that you have to understand that the way we got into this mess -- sort of the second mess, not the first mess -- is that a number of policy people including columnists at "the new york times" and advisers to the president who really wanted to try to fix the company have said what we needed to do was take a chapter from keynes and borrow and spend a lot of money, and if we do that, that'll be great. and there were those of us at the time who said that's not going to work. and the reason we said back then is it's not going to work if you put in this year a big surge in government spending, even if that makes gdp go up this year, next year it goes down again. so if we're going to do to policies they're going to recommend, we had to know it would be great next year, and we could afford to lose the 2% growth, and we'd take the stimulus away. since that didn't seem plausible at the time, what we argued back
then -- i could e-mail you testimonies -- was that we need to pursue policies somewhat reminiscent of what we see in the 4% growth chapter now. we were talking about what next steps should be, and there wasn't a democratic senator in that hearing who was willing to defend the stimulus on the record. and i was, i was being, you know, pretty combative in my testimony, and nobody argued with me. and the point is that the economy is still terrible. i think 2% is actually optimistic for what we're growing right now. and everybody wants to do something to fix it, and that's a great opportunity for a president that's willing to try something new. >> thank you. and i just wanted to emphasize that we've been talking a lot about fiscal policy here, about spending and taxing. and entitlement policy. but this book also gets deeply into energy, into immigration, entrepreneurship and a lot of other areas where we think
policies f they change -- if they change, can promote growth. so i thank you all for coming. thank you, mr. president, and, please, pick up your book on the way out. [applause] and read it. ?rsh. [applause] [inaudible conversations] >> booktv is on facebook. like us to interact with booktv guests and viewers. watch videos and get up-to-date information on events. facebook.com/booktv. >> next, chrystia freeland talks about the rides of the super rich, the top .1% of the global population. and the impact they have in the world. this talk was hosted by politics & prose bookstore in washington, d.c., and it's about an hour.
[applause] >> hey, thanks a lot. and and sorry for keeping everyone waiting. you-had a chance to finish reading my book in that time. [laughter] so i probably don't need to say anything about it. so i'll just say a few things, um, about what's in my book, and then maybe we can talk about it. as i've been sort of doing some interviews with my book, a favored way of interviewers to sort of begin the conversation is to say the rich have always been with us, after all. and, actually, that's not true. and one of the points, really the starting point of my book is to say, actually, things are different now. and we really need to be aware of this new political and economic reality that income inequality has grown hugely in
the united states and in the western industrialized world and, indeed, around the world and that a lot of the action is at the very top -- is that better? okay. i'm so short, i have to move the mic. a lot of the action is at the very, very top of the income distribution. so to just give you a quick sense of how things have been changing, i'll give you a few quick numbers. so in the 1970s -- this is now u.s. numbers. in the 1970s the top 1% accounted for roughly 10% of the national income in the u.s. that number now is above 25%. what's even more striking is the top 0.1% now, so 10% of the 1% is now close to 8%. so 10% of the 1% is today within sort of kissing distance of where the 1% was in the '70s. that's a pretty big shift.
another way to get a sense of things is -- now not talking about income, but talking about wealth -- if you take the wealth of two admittedly hugely, hugely rich people, bill gates and warren buffett, their wealth is equal to the collective wealth of the bottom 40% of the income distribution in the united states. so two guys are equal to the bottom 120 million americans. that's also pretty big. interestingly -- and this was a surprise, you know, so i sold my book to the publishers in september 2008, just before the financial crisis. and then the crisis happened, and many people were sad, and i had a particular reason for sorrow because i thought, oh, by god, the entire premise of of my book is gone, you know? the super elite is over. it has to be.
this financial crisis has happened, surely the system is going to change completely, and these super fortunes will be wiped out, and there will be sort of a recalibration. so, actually, i wrote a new book proposal. but after about six months, i was talking to my publishers, and we said, you know what? actually that old proposal is still going to work. and the data have borne that out. i like to talk about it as the 1% recovery. so if you look at -- [laughter] and it's really true. if you look at the economic recovery, you know, the numbers are really in terms of sort of income distribution for the 2009-2010 economic recovery. and a couple of economists, the guys who are the real kind of data jocks on income distribution especially at the very top, emanuel -- [inaudible] and thomas pickety, they've clinched the numbers for 2009-2010. and they found that in that recovery, and there was an economic recovery, 93% of the
income recovery in that period went to the top 1%. and what was even more astonishing, they found, was 37% of the recovery went to the top 0.01%. now, admittedly, those people at the top had been hit particularly hard, right? because they tended to have financial assets that had gone down. but that's a pretty big rebounded. and in the top 0.01%, it amounted to about 4.2 million per family. so when you think about why is there this polarization in america, why are there these very different views about the world, you know, part of it is there are very different worlds that people are inhabits. having said that, so, you know, my premise is this isn't just a case of the rich have always been with us. something really different is happening, and it's important for us to talk about it, to research it, to figure out what's going on.
but actually, there is a real reluctance, and i have admit particularly here in america, and i'm canadian, so i see you guys with a little bit of a distance. [laughter] particularly in america there is a reluctance to talk about these issues of income distribution. and one of my friends who was supposed to be here tonight, i talked to him about this, and he said that it's -- i'm going to quote him because it was such a nice line. so he said: i was once told by the head of a prestigious think tank in washington, d.c. that the think tank's board was very unlikely to fund any work that had income or wealth inequality in its title. yes, they would finance anything to do with poverty alleviation, but any quality was an altogether -- inequality was an altogether different matter. why? because my concern with the poverty of some people actually
projects me in a very nice, warm glow. i am ready to use my money to help them. charity is a good thing, a lot of egos are boosted by it, and many ethical points earned even when only tiny amounts are begin to the poor. but inequality is different. every mention of it raises, in fact, to the issue of appropriateness or legitimacy of my income. and i think that's absolutely true. and that's why even when you have a discussion about the general issue of income ine wagty -- inequality, once you start saying, actually, a lot of action is in the top 1% or the top 0.1%, people get really anxious. and actually one of my nicest moments so far with the publication of my book is i gave an early talk about this in chicago, and bill daley was on the panel. and he spoke after me. and he started his talk by saying, you know, actually, i guess it is okay to talk about income inequality. it's not class war to talk about it.
and i said, yes, mr. daley, that's right. it is okay. so what are the drivers? what is causing this really, really big gap? now, here, um, you know, rather obviously the people who are most interested in talking about income inequality tend to be on the left. and the left really likes to talk about the political drivers. so the left likes to talk about how taxes have fallen, how the culture has become much more open to really high ceo company saying than it used to be, decroon in the -- decline in the rights of unions, deregulation, and all of those things are factors. but i think it's a real mistake to ignore the economic drivers as well. and i think there are very, very powerful, underlying economic drivers, and those are pretty obvious; globalization, the technology revolution. and one reason i think that it's
really pretty clear that those are key drivers is this is a global phenomenon. and i do sometimes think the american discourse about it tends to be very american. so i'm always quite entertained when i read about, you know, a paper that says rising income inequality in the united states is due to this one particular law passed in the 980s. -- 1980s. okay, then how does that account for rising income inequality in canada or, indeed, even in france, in germany, in the united kingdom? i mean, it's happening all over the world, it's also happening in emerging markets. but i think it is important to face that scary because if you see it just as a political phenomenon, you know, you're going to lose sight of what i think is the biggest challenge which is that these, actually, quite benign economic forces, right? i love the technology revolution, i'm a google addict. they're also drivers of social and political consequences which are not quite so benign. the way i like to look at it, and this is a quote from peter
orszag, is, you know, how he sees it is he said, look, the big drivers are probably these economic forces, but the issue is that particularly in the united states the politics instead of trying to mitigate these very powerful economic forces has exacerbated them. so even as you have these economic forces creating much, much more concentration at the very top, you expect politics to sort of try to so much that blow. social institutions to soften that blow. and instead it's been an accelerate rant. and to me, that seems just about right. so who are these super rich guys, and what do they think about the rest of us, and what impact do they have? i would say, you know, the way i would characterize them as a group -- this is sort of a global group -- is these are global alpha geeks. so they do tend to be. and this is a difference from a kind of, you know, downton abbey
set up. and this speaks to the economic drivers of the phenomenon. these are really hard working people. and one of the interesting things when you look at the data about hours worked is for the first time people have counted this kind of thing, you have less leisure at the very top than the middle. so these are people who are really hard working, tend to at least think of themselves as self-made, and i'm going to use that as a rather generous and roomny concept. so you could have an affluent dad like bill gates does, like mitt romney does, but still think of yourself as self-made because you didn't inherit the business that made you a multimillionaire from your dad. and that's particularly important playing into how they think of themselves in the world. it's important right now for these guys to be really numerate. one of the things i found really interesting and quite sort of international is this is really the age of mastery of numbers.
and my favorite example of this, you know, we're kind of -- that seems to make sense when you think of the silicon valley guys or the wall street guys, but i'll bet you if you sort of in your mind's eye are imagining the russian oligarchs, you know, you think a guy in some fancy italian suit with a mole on one side and guys with guns on the other side, and this is true. [laughter] but he also probably has a ph.d. in math or physics, you know? even those guys. and this is true also of the chinese, of the indians. it's also a really, really global group. and this is another key characteristic, something which is quite different from previous elites, that because the capital flows that they are surfing are global, they're living really, really global lives. one of them said to me we are people who know flight attendants better than we know our own wives, and i thought this shows you're not actually a true plutocrat because, of
course, you would have your own plane. [laughter] the wife of one of them said to me, and i think she may have been sort of exaggerating for effect, but she said, you know, my husband, they live in new york, he is a big money manager, and they were talking about some sort of new york cultural thing. and i was talking to both of them, and she was talking about it with great sort of enthusiasm, and i said does your husband know about this? she said, my husband? his feet do not touch the sidewalk in new york. a car pulls up in the morning, takes him to his office, the car pulls up, takes him to his lunch, takes him back to the office, takes him home. she said the only place that he walks in the world -- he work withs out in the gym, of course, but the only place he actually walks is davos because the streets are so crowded. thest one -- it's one of the things that adds to the ambience. it's true, they can't use their cars because the streets are so crowded, it's faster to walk. so they are really, really
global. what is there relationship to the rest of us? and i think this is really a key, the key issue. and it's complicated. so i think we're living, even as we're living in this period of bigger divide between the very, very top and everybody else, really as big as it has ever been and arguably bigger than ever, but the world bank economists did this calculation of who was the richest guy in history, and he does the romans, he does the middle ages, and his conclusion is the richest person that ever lives is carlos slim. arguably, right, bigger gap than ever. but interestingly, culturally in some ways that gap is masked. so bill gates in 2010 spoke to a group of mit students, and one of them -- brave kid -- asked him, you know, okay, so what
does it feel like to be a billionaire? and he said, oh, you know, after the first couple million, it doesn't make that much difference. after all, and he said, you know, after all, big mac costs the same amount of money for you as it does for me. [laughter] i interviewed eric. schmidt, and first of all he was still the ceo of google, and first of all his office was probably from this podium to that armchair. certainly no longer than that. maybe shorter. and gaps from the desk to the book shelf, a really small office. and when i went in there, there was a whiteboard that had all kinds of equations scribbled on it. and you know journalists, we like to kind of suck up to the people we're interviewing to get them to disclose their true secrets. so i said, eric, wow, that's amazing. you're still an engineer. you're the ceo, but you're still writing equations down on your whiteboard. and he says, no, no, no, i
didn't write that. whenever i'm not in my office, anybody else on the floor who needs a space to work can just come in and use my office. so here he is, small office, ceo of one of the biggest companies in the world with, very dressed down, anyone can use his office. i talked to him a little bit about the culture of the valley, and he said, you know, one thing is, it is culturally not allowed here to have a driver. that is simply not done. you can have a private jet, but you are not allowed to have a drive. so there's all of this stuff which says, actually, there's not really a gap. but, of course, there really is a gap, a really, really big gap. and i'm going to turn again for a moment to the russians who maybe i know the best of all. there is a very revealing moment. i interviewed the russian oil tie onin -- tycoon in 1998. and at this moment he was the richest man in russia, but
russia had just experienced its default and devaluations. so he was in kind of a bad mood. and this is what he said to me about oligarchs and everybody else. if a man is not an oligarch, something is not right with him. everyone had the same starting conditions, everyone could have done it. and he really meant it, you know? it was very, very heartfelt. and he was particularly -- he was kind of criticizing himself in this because he had lost a couple of hundred million dollars because he had stupidly entrusted a nonoligarch, there therefore, not a true man, with running his bank, and this nonoligarch -- by definition, not a smart guy -- had the loss of a few hundred million bucks. but that is, you know, there's a little bit of that thinking in a lot of these guys, and it's interesting because i came across, i think there are very strong parallels, i won't have
time to talk about all of them. but in my book i talk about the parallels of industrial revolution. and there's a line from andrew carnegie which is very, very similar. so carnegie said this talent for, that this talent for organization in management is rare among men, is proved by the fact that it invariably secures enormous rewards for its possessor, no matter where or under what conditions. if a man is not an old dark, something -- oligarch, something is wrong with them. the man who whose service can be as partner is not only the first consideration, but such as render the question of his capital scarcely worth considering. doesn't matter how much money you have to start out with. for such men soon create capital. and in the hands of those without the special talent required, capital soon takes wings. so there's kind of a royal jelly element to it. interestingly, sort of given that, given this sort of sense of being self-made, this, you
know, very hard working kind of alpha-geek condition, you might imagine that that would create sort of closer ties, greater sympathy with the rest of us. what i found is in many ways i think it creates a greater distance. and a few places where i observed this was, first of all, talking to people in this group about the hollowing out of of the american middle class and what's going on and what it means. and i found a lot of people really sort of feeling that it was an economic inevitability and maybe not necessarily a bad one. so here are a few things. a greenwich-based hedge fund manager -- actually, originally scandinavian and educated at a liberal arts college in the university -- he said to me, the low-scaled american worker is the most overpaid worker in the world. [laughter] he said it's sad, but it's true.
the american-based ceo of the one of the world's largest fund managers told me about a conversation that handed in his investment committee. quite often people would tell me things like they didn't say it, but their friends said snit my kids do that also sometimes. so he said this is someone else on the investigating committee said. his point was that the transformation of the world economy lifts four people in china and india out of poverty and into the middle class, and meanwhile one american drops out of the middle class, that's not such a bad trade, right? like four to one. i spoke to a cfo of a u.s. technology company, and this was like a really, a person who was really sort of charming and lovely life story. he was taiwanese-born, his parents were immigrants, and his parents told him and his brother when they immigrated that they were temporarily poor. i love that, you know, imagine that.
we're going to be temporarily poor. and sure enough, he and his brother just like complete rock stars, both of them went to stuyvesant in new york. they were such avid members of the math club that now they fund it. one brother is -- yeah, exactly. one is in silicon valley, the other is derivatives on wall street. this brother, the cfo, his parents were really angry at him because he dropped out of a ph.d. program at stanford having gone to harvard to start becoming a plutocrat. so very hard working guy, very smart, did great. and this is what he said about the american middle class. we demand a higher paycheck than the rest of the world. so if you're going to demand ten times the paycheck, you need to deliver ten times the value. it sounds harsh, but maybe people in the middle class need o decide to take a pay cut. similarly, and perhaps less forgive my was the kind of stuff that i heard talking about the financial crisis.
so in 2008-2009 i expected the wall street guys to feel bad, you know? to feel guilty even. and i realize you probably don't tell the truth to a reporter, but these are off-the-record or conferences. and almost invariably i found that they didn't blame themselves, and here is who they blamed. so the ceo of one of the big wall street investment banks told me really sincerely he did not feel guilty for the crisis. the real culprit was his cousin who owned three cars and had borrowed way too much money for a house he could not afford. guys like his cousin caused the financial crisis. another not investment bank, a hedge fund guy told me the same thing, but this time it was his in-laws who did the same thing, subprime mortgagings. [laughter] and then my favorite one, private equity guy lives in the
new york and palm beach, he said, you know, it is my golf caddie. i have a golf caddie in arizona, he's a very good golf caddie, but he bought three condos. how could a golf caddie afford three condos? and it's because of guys like that that we had the financial crisis, clearly. so that, to me, suggests a certain distance from the woes of the middle class. [laughter] even more surprisingly, and this is sort of a newish post-obama phenomenon, is the sense, is the growing sense of victimization. and you say sort of -- you may sort of be taken aback by that, how can a billionaire feel victimized, but they really do. and i'll give you a few examples. there's a guy that's an activist investor actually doing great things. he is the guy who is behind marisa mayer becoming the ceo of yahoo!
really as an investor does great things. in december 2010 he sent an e-mail to his friends, and the subject heading was battered wives. and the battered wives were the wall street financiers who were accepting the abuse of president obama. and the e-mail actually says it's sort of written in the voice of a battered wife, and it says he really loves us, and when he hits us, he doesn't mean it, and most of the time the bruises don't show. and it goes on in that vein, really seriously comparing themselves to battered wives. another guy who i spoke to called t.j. rogers, founder of a semiconductor company, said to me that he feels that the victimization of the super rich has become so supreme in the united states that they are being treated like an ethnic minority. and he feels that the president should be particularly ashamed of treating them this way since
he knows what it's like. [laughter] true, true fact. he said this on video, you can look it up. and as for hitler analogies, i'm not even surprised anymore. it's just common place, you know? efforts to revoke the tax on, the special tax treatment of carried interest which is what a particular benefit for private equity. steve schwartzman's famously compared this to hitler's invasion of poland. i recently sort of as part of the sort of getting the story of my book out there did a piece for the new yorker where i profiled leon cooperman, and i write about him also in the book. and just kind of by the way in one of our considerations he said, you know -- conversations, he said, you know, there really are so many parallels between the rise of barack obama and the rise of hitler. and i said, excuse me? he said, no, i don't mean to compare them, of course, but
there really are a lot of parallels. and he went on and on is and on and on. [laughter] so, again, a very commonplace thing. the other concept which was really astonishing to me was this sense not just of victimization, but that the middle class owes them and a sense of kind of being taken for granted and not being treated that well. and so i'd like to introduce you to the concept of the self-pacs. the potential who introduced -- the person who introduced me to this concept is a guy called foster freeze, multimillionaire, and you may have heard his name because he was the chief backer of the rick santorum super pac. so i interviewed him in february, and i asked him about taxes, you know, did he think rich people should pay more taxes. and he said people don't realize
how wealthy people -- [inaudible] there's a fellow that's ceo of target. in phoenix he's created a me assume of music. he put in around 200 million of his own money. i have another friend who gave a health facility to a place in nebraska or south dakota. bill gates just gave 750 million to fight aids. i think we should get rid of taxes as much as we can because you get to decide how you spend your money rather than the government. i mean, if you have a certain cause, an art museum or a symphony and you want to support it, it would be nice if you had the choice to support it. where we're headed, you'll be taxed, your money taken away, and the government will support it. it's a question: do you believe that the government should be taking your money and spending it for you, or do you want to spend it for you? and he went on to say, actually, that it's absurd to tax the really productive billionaire
finance in the 14th century. so when the 14th century, beginning of the 14th century, venice is one of the biggest cities in europe, one of the biggest and richest and that's kind of remarkable because if you've ever been there, it's such a crummy place. rd, mosquito bitten, lagoons, very hard to build are the only reason italians ended up babies because they chased them off the good land. so yours is incredibly rich, incredibly powerful state, sending its trade mission to china, controlling creeks, lands along the croatian coast, controlling my inspiring to the italian and land. how did they do it? to the nations of this fabulous right we can still taste today, where the liquor in her to probably the most innovative and economic system at that time.
they have a particular form of contract system, which allowed. unusually if you were a person willing to take on risk. even if you didn't have capital, you could share in a deal with the partner who did have capital: a trading nation in the guy who didn't have capital, but he raced his life took a share of the profits. this really was the reason you have this huge market title vicar and both of venice. but then, in the 14th century, as dennis is getting going, the guys at the top realize that happiness open economy was a bit uncomfortable because new guys kept on coming up. you had your capital. you were hanging out at home, but she didn't feel it going to china and possibly dying anymore. you guys are coming up in pushing you out of the elite. so introduce them being, the official book of the political
oligarchy of venice. and if you were an economy you are one of the ruling oligarchs and if you weren't, you weren't. it's not just historians today who say well, this is the moment they close their society. at the time, the nations immediately thought this was the closing of their political and economic systems and give it a name. they called it the closure. it's an important story because what it says is economies that are robust and absorptive and meritocratic christina leads they can make money, they can add this figure in economic growth, the casey case to the top are not necessarily going to have an incentive to keep it open. in fact they may be tempted to tilt the rules of the game in their own favor is that it's originally to do fit the power power to do it. when i was writing my book, i talked to a lot of economic
historians of the industrial revolution and economists today we all agreed he has come and economic transformation we are undergoing is very similar to the industrial revolution in the same tumultuous change, you think vigorous economic growth, but very difficult socioeconomic consequences. most economists i talk to but then say, it means that a medium-term and long-term will be okay. after all the industrial revolution, that kind of work goes. so one answer is to quote keynes and fan of long run we are all dead. another answer though is to remember that the social and political accommodation to the industrial revolution, what made it okay for everybody was hardly simple. his two world wars, a great depression, communist revolutions in china and in russia and in the united states, the progressive era, trust
busting the new deal. the invention of an entire array of new social and political institutions that we forget the extent to which the world we live in didn't exist 150 years ago at all in any of those institutions. people were scared at the end of the 19th century. they didn't know what they had created and they were scared enough to be inventive and to really society had to change as dramatically as the economy did. so my conclusion would be to say i think we are in a comparable air right now of wrenching change where there is a super elite that has done incredibly well. people in the middle are being hollowed out and we need someone to start inventing office institutions. thank you very much. [applause]
>> i was terrific. i've been looking forward to coming here ever since a sorry you. my question follows from exactly what you left off. you talk a lot about the plutocrats, less although more about the ordinary people who are leucine and who are very angry. but they are very angry at poor people with the government is wasting their tax money on. they don't seem to have very much to do with the people you talk about who are causing the problem. and somehow in 1890, 1910, 1932 they seem to have no difficulty, ordinary people, people at the bottom figuring out who was at fault. i grew up in the 50s and 60s. i graduate from college in 1969.
you cannot even imagine. we sought in the 60s who were building on the basic foundation of the new deal. and now the new deal itself is under threat, stuff that we just took for granted. why don't they realize that this time? obviously republicans want them to kick down rather than up. provided they believe it? elizabeth warren is exactly the right thing at the corporations are to blame, do we need to have a fair society and that it will work better economically. that the country will grow faster. she's having a tough time in massachusetts. that's my peoples republic of massachusetts and she's merely ahead. why? i will offer two ways of thinking about it.
one in my book and one which is beyond the scope of my book. one as i do think there has been some very powerful capture, especially before the financial crisis. i think this notion of plutocrats talking about how they're going to blame the proletarian under their boot doesn't have been. but would that have particularly up to 2008 was the intellectual establishment, really buying into the notion that trickle-down has been working particularly to deregulation. my favorite example, which i went back and looked at it kind of horrified me. uk's might remember this widely reported. in january 2007, think about that date january 2007, mike bloomberg and chuck schumer, commissioned a report from
mckenzie when new york was falling behind compared to london. to be the support you can google it in 30 seconds. it's shocking the main problem, the single biggest thing holding back the u.s. economy is overly harsh regulation of credit derivatives. it's in this report you will start a section on credit derivatives, how we need less regulation of them otherwise london will take over global finance. what was amazing at the time is everybody agreed that this report. eliot spitzer was quoted saying how great this was. chuck schumer was one of the sponsors in the u.k. labor was running the u.k. and even the critics said this report showed that even the labor is kind of spending far too much money on the nhs at least they give regulation right.
so there was a very widespread bipartisan kind of economic faculties of the western world bought into this and that played a very big role. the other thing and this is a big difference between now and the response to the industrial revolution. government exists now and people no know government and the necessarily like it. in particular, americans or canadians are think about the olympics and the british choosing not as a symbol that was good good about britain. all for you to another book that is a great book called the submerged state. it's by woman called to send that letter was a political scientist at cornell. it's really interest them because what she argues is there is kind of this bipartisan deal since the reagan era to kind of
hide funding of state services. in the way it worked was the only way democrats could get state services funded to get it through congress list by farming it out, by having nonstate bodies deliver the assistance, that kind of thing. and the result, suzanne said his americans -- americans don't actually recognize when the government is doing good things for them. [inaudible] >> this kind of reason to my question, but enough to cover, but the attitude towards the plutocrats in europe, one would assume they're used to heavy taxes. but to the extent that she looked she looked or talk to those people, do you still have the same undercurrent of resentment in thinking that the american plutocrats got it right or are they more enlightened?
>> is general and the american plutocracy among the rest of the world. they feel it's pretty good to be american. very good to be singaporean. that's also excellent. monocoque am a very good place. elgin, not too bad. europeans feel that america -- george soros said to me the great thing about being a rich guy in america versus europe is in america if you're rich, people look up to you, and you're not necessarily. what is interesting is similar tensions are evident in europe, two and similar reactions. we've all been following france and attacks at the top living to 70% in the reaction of it to belgium. not for tax purposes, except kind of for tax purposes. in switzerland interestingly, there is a huge kind of national
revolt against the superrich should all pay a high-tech suit either. very similar tensions, but there's a more extreme dynamic in the united states. >> which u.s. government policies in your view of that and perpetuate the transfer of wealth between the middle class in the top 1%? and could you rank importance, including for example -- >> would probably take all night. >> i suppose it would, but please address and include the tax equity, inequities, especially between earned income and capital gains. the federal reserves policy of low interest rates and the emphasis on spending rather than
saving and the reward given to borrowers rather than savers. >> from that famous line when harry met sally, i'll have what she had. the ones that i would single out or just because it's so egregious to carry pitchers treatment. i just find that amazing and i find amazing that for years of a democratic president still hasn't managed to roll that back. how cannot he, .1. 1.2, i have yet to talk to a private equity person to matter how liberal. he served in democratic administrations some of these guys. you talk about this particular thing. i say okay, it's fabulous that we have it, but it is kind of unfair. they are adamant that it is
absolutely morally correct this treatment, absolute adamant and enraged the tickets question. i would be one because the next difference. i say this and if you are paul ryan, you say come on, that doesn't make any difference. it doesn't make much of a difference, but it's very enraging. the other thing really important is regulation of those industries for the whole industry is based on what is the regulatory framework and most physically, finance. if you want to talk about was the greatest ripoff. the middle class around the world. it was the regulatory failure leading to 2008 and it didn't have to be like that. i don't want to sound like canada is a perfect country in the world because there's very many problems. the one thing, which is a great
counterexample and shows you can have a normal, civilized western economy, live like a normal person and still regulate increases canada. canada did not have a crisis even though the rest of the world did just because canadian government and regulator said no to their banks. it was interesting, canadian finance minister said we were so out of step but i went to beijing and the chinese said canadians coming or bank regulation is so conservative. it is absurd. here i am a tory and the communist chinese are telling me i'm too tough at regulating my bank. so they held the line for which i give them so much credit. as you may have seen, average growth of canadian families now higher the american families.
if you want to talk about what is a ripoff of the american middle class, my number one with the failure of bank regulation. >> can i ask one more quick question with a long answer? >> i'm sorry, ma'am. i'm going to stand up for everybody else here. >> one of carl sagan's books was about a colony on one of the policies when he gets mugged. i assume they're working on this because my question is really about the recognition these people have for how much they depend on the rule of law and public infrastructure and public treasury saving them, for example. i wonder if you could talk about their own psyche and fragility of their fortunes based on possible instability. >> of course it varies, but what
i was very surprised by was there is something of you quote cross again, but also eyeing land and john coates advocacy. i was surprised at the extent to which those current. there's an actual actual effort to build a colt. the paypal guy is one of the funders have it. this is where beautiful beauty journalist couldn't make it appear by the forces as milton friedman's grandson. they are trying to build c. studying, trying to build international waters, where no laws would apply. you could go and create your kind of world. there were actually some people make you quote them in my book.
when obama gave his speech last fall, the one sordid evocative of fdr's commonwealth speech immediately a couple of investor knows that pointed out a new plan that had been discovered and suggested other rich people should move there because it wasn't going to be nice to live in america anymore. more than you would think, teresa. eyeing land sends, i think you got them in the foster for your comment that we give them so much. we are the innovators. and i have been to one other point. i interviewed gary gensler and he was speaking with great passion and pleasure about bringing transparency to the swaps market and how this is important because, for example,
have there been a transparency which will be in place for the beginning of 23rd team, things like those treats the loss jpmorgan so much money, they would be much more visible and i couldn't resist so i said is james diamond grateful to you? is the same thanks for bringing this transparency to the market so i don't get sick again. he looked inside i don't expect them to be grateful to me. our interests are a little bit different. >> a quote and a question. something you said earlier brought back the roots of the latin american priests. i gave food to the poor and they called me a saint. i ask why the poor have no food and they called me a communist. my question is about the personal politics of the superrich in america. you touched on it, but did you find anything surprising or counterintuitive about personal politics, democrat or republican for those who interviewed?
>> what i did find surprising was that the democrat still had a hard time when he touched on particular areas of self-interest, they had a hard time seeing past it. that i did find really surprising. the only other thing i would say about that might be interesting for you, someone is interesting talking about a guy called nick hanauer. he seattle-based investor was an early amazon investor built a bunch of software companies and it just written a book whose title i've forgotten, but will be easily googled full. he makes the point is truly excellent. the reason you have this emotional reaction in the billionaire class and is quite extreme sense of victimization who are doing that badly.
he thinks it has do be so central to them to feel not only affluent, but also righteous. particularly since the reagan era there has been this equation of being a successful business person was contributing to the social good and in some ways the size of your bank balance was a measure of your virtue and trickle-down was working. the richer you were, the better person you were. by being rich, european good. i am now quoting hanauer. i don't want to pretend this is man original insight, but it's a good one. he says that's a great because if you're rich and you don't have to feel bad when you see a homeless person, when you can feel like i deserve to be rich because i didn't know that myself. and by the way, and being rich
has done really good things and also they should be grateful to me. he says that such a comforting place to be and that is being challenged. i personally don't think the president frederick has been particularly harsh. but if you talk to the rich guys, every single one of them exist harsh. even guys in the cabinet gets harsh. it sounds so harsh to them i would argue because even if little bit of a challenge in this place of absolute virtue. only two more questions are allowed. >> this picture you present so well, so eloquently of the west increasingly dominated by small concentrated groups with wealth and political power of cultural
power as well and also separate but the mass of humanity and i've seen this in your interview with bill moyers when somebody suggested a return to new deal type politics and institutions seems to be rejected that is not a possibility. we can't reverse the trajectory we have now. so given that, do you have any notifications to how it can be improved, how it can stop the depletion? but would you recommend? >> i don't mean this is a copout at all, but there's a lot of intellectual work people have to do. i really strongly think it's a mistake for people on the left, liberals, whatever you call them to say let's go back to the
1950s. mostly because i don't think those jobs exist anymore. not enough of them. even when people are saying this is the return of manufacturing and how great i was. have you looked at the wages now being paid in detroit for the newly hired people? is $13, $15? >> in norway, quite successful societies, salaries are very high. germany as well. >> normally is different because of oil. >> i think sweden and germany -- >> in japan. i'd be careful about drawing too much for japan. i think that sweden, denmark and germany are really interesting and what they've done with the deal between labor and capital and also frankly across society. the german reaction to the recession was sensitive laypeople of, everybody would effectively take a pay cut of
30%. it takes a lot of social unity to have that. having said that, i think it's going to take more than going to the social democracy of northern europe because you're feeling tensions also in northern european countries and you'd be surprised at the extent to which this whole discourse we are having could have the same discussion in berlin and particularly in berlin but the germans are realizing this in a way they didn't hollow at the middle class. they did the rest of your. they are the china of the e.u. that's one way to do it. the only other thing i might say, which is funny and the reaction i liked in my book, senior european goldman sachs guy who i quoted my book sent me an e-mail saying he had rented and i have been the e-mail with trepidation because i thought
was going to say. he said something. i'm paraphrasing. i've just read your book, terrifying. i think i'm going to have to move to sweden. so when you even have the goldman sachs guy, and the swedish model is the only one that works. that says something. >> thank you. >> i'm not sure i know how to phrase this question. did you see any difference between the people that did create something? like bill gates and the guy from apple. as compared to the people who i just called paper manipulators, is there any difference in their attitude? i mean, bill gates i don't think behaves as though he's an
entitled person, but i don't know him personally of course. he's doing a lot with the money that is good. i don't know the people on wall street. >> of course there are differences and certainly what i found quite an was to talk to any of these guys in each one will say in the abstract, guests can rent seeking in the case of garbage. by manipulating the government are very, very bad. i of course am not one of them. every single one sees the world that way. even the russian oligarchs to the world that way. i made my own fortune. all the other guys manipulated the government, but not me. i found this very much with the americans, too. if you talk to silicon valley, they are the guys who feel the most righteous and they should. and they love to criticize. it's one of their favorite
activities and they see it very, very clear line. having said that, as soon as they have the power to become a monopoly, they try to be one. you know, think about microsoft. i think we have to be a little bit careful about falling into the black sheep, white sheet. the thing about silicon valley in the middle class and this is why i am suspicious of an analysis that sees this purely as a rent seeking phenomenon and isn't worried about the economic sources is just today facebook had an investor call and they announced how many people they had employed at the end of the third quarter. just think in your mind can guess what that number is. 4300. facebook employs 4300 people. if you want to know what is happening to the middle class, that single fact tells you